Flushed in Dispute: Pinewood Sanitary District Entangled in Courtroom Battles
The Pinewood Sanitary District (PSD) volunteer board and staff strive to modernize the district’s aging infrastructure and outdated operations, working hard to bring PSD into the 21st century. However, their challenges have intensified with the emergence of costly legal battles.
PSD was established to serve the East side of Interstate 17. However, in 2013, the Shuster companies, Munds Park Community Church, and a few private lot owners requested the extension of sewer lines to the west side. Unlike traditional property taxes, PSD operates on a unique fee-based system, charging property owners within its boundaries for essential services, including construction costs to run sewer lines to their land.
PSD, acting on behalf of district-wide property owners, secured a $3 million loan from the Water Infrastructure Finance Authority (WIFA) to initiate the west side project and address other priority needs. Over several years of hard work, bureaucratic obstacles, and $1.9 million in west-side construction costs, the PSD sewer lines have been extended. Unfortunately, now that the bill is due, the new owners of the Munds Park RV Resort, Inspire Communities, along with the Shuster companies, are either contesting payment of their outstanding construction bill or, in Inspire Communities’ case, taking legal action against the Sanitary District.
Because these disputes, depending on the outcome, can significantly impact the Sanitary District and our community, the Pinewood News contacted the Shuster Companies, Inspire Communities, and Bill Spain, Board Chairman for the Pinewood Sanitary District for comment.
Shuster Companies Battle Over Paying Their Tab
At the heart of the dispute lies the unpaid construction fees owed by the Shuster companies, who in 2013 sought annexation into the Pinewood Sanitary District, and Inspire Communities, who now find themselves entangled in the financial aftermath after purchasing property from the Shusters. Garry Shuster, a prominent local landowner, holds several properties in the Park through various LLCs. Shuster properties on the east side include the boarded-up Woody’s gas station on Pinewood Blvd, the land behind Woody’s, and the land behind REMAX. On the west side, Shuster companies own the Chevron station, the strip mall that houses Mary Coyle’s Ice Cream, the land and buildings for Flagstaff ATV Rentals, Agee’s B.B.Q. and Kota’s Coffee House, and Phase 5 of the RV Park. In 2021, the Shusters sold the Munds Park RV Resort (Phases 1, 1a, 2, 3, and 4) to Inspire Communities for more than $43 million.
In 2022, the Shusters paid around $121,000 for sewer line construction costs related to properties on the west side. They are currently awaiting connection pending county approval. However, the Shusters still owe an outstanding debt of $659K for the construction fees associated with Phase 5—originally planned as a vast expansion of the RV Park prior to the sale to Inspire Communities and are now contesting payment.
I was curious why the Shuster companies were disputing construction fees for Phase 5, despite explicitly requesting annexation to PSD. So, I rang Bill Moore, Account Manager for Shusters M.B.C. Properties, who handles communications between PSD and Garry Shuster, to schedule an interview. During our conversation, Bill pointed out that their main concern is the perceived inability of PSD to serve Phase 5 adequately. Bill Moore states that, to this day, they have not received a clear timeline or written assurances that PSD can handle development of Phase 5, and without these assurances, they see no reason to pay at this time.
Before my interview with Bill Moore and Cindi Eagleton, Garry Shusters daughter and business partner, I addressed Bill Moore’s concerns at the PSD Board Meeting on May 31.
I asked the Board directly about Bill Moore’s difficulties obtaining capacity information and guarantees from PSD regarding their plans for Phase 5. Bob Timberman, a board member, stated that the Shusters have not submitted development plans for Phase 5, and until they do, their needs cannot be assessed. Bill Spain, the board chairman, affirmed PSD’s responsibility to provide services and assured that they would do so. However, he emphasized the need for the Shusters to present their development plans so that the district can properly advise them on how to move forward.
I noted this information and presented it to Bill Moore and Cindi Eagleton during our interview. I explained that the PSD Board is ready and capable of servicing Phase 5 but underscored the absence of submitted plans. I expressed my curiosity about the new development and asked what was planned for the area. However, Cindi and Bill declined to respond stating that the matter was with their attorney.
In an email exchange, Bill Moore expressed frustration, writing, “After waiting for over ten years, the Shusters are also being asked to pay sewer line construction costs of an additional $659K for the large and mostly vacant pastureland to the northwest of the RV Park.” This statement is intriguing because it does not imply that the land is slated for development, but rather it would be a waste to connect it. Furthermore, it’s not “an additional $659K”; it’s the bill for completing annexation at the request of Garry Shuster. Considering this statement and the lack of submitted plans to PSD, it raises the question: are there genuine intentions to develop Phase 5?
Regardless, it’s important to note that PSD did not offer this service arbitrarily. The provision of service and the associated construction fees were requested and agreed upon by the Shuster companies.
Before our interview, Bill Moore sent an email outlining their concerns. He mentioned that the Shusters had expressed their intention to pay the outstanding $659K to PSD but were dissatisfied with the requirement of full payment. While the Shusters paid in full for construction costs for other west-side properties, they now want to establish installment payments for the $659K due for Phase 5. During our interview, I reminded them that the recorded Rules and Regulations (R&R) state that payment is due in full upon completion of construction and that installment payments must be arranged beforehand. I brought attention to the outstanding debt spanning a decade and wondered why they never made payment arrangements before now. Cindi and Bill declined to respond, citing their attorney’s involvement.
Lastly, there was one more puzzle I sought to unravel. When Inspire Communities acquired the RV Park from the Shusters, they inherited an outstanding debt of about $650K owed to PSD. This debt is directly tied to the annexation of Phases 1, 1a, and 2—A debt incurred by Garry Shuster prior to the sale of the RV Park. It remains unclear whether Inspire Communities was aware of this obligation before the purchase, as they are currently pursuing legal action against PSD to be released from it. One would assume that negotiating the debt before the acquisition would have been a more straightforward solution rather than resorting to an expensive and time consuming lawsuit. To shed light on this matter, I asked Bill and Cindi if Inspire Communities had been informed of the debt before purchase and requested a copy of the Disclosure Statement for verification. Cindi and Bill declined to respond, citing their attorney’s involvement.
Inspire Communities, Development Powerhouse Challenges Hometown Sanitary District with Legal Action
I contacted Inspire Communities R.V. Resort Regional Manager Ashley Skeeters for comment. She responded to our written questions with a copy of the filed complaint, stating that it clearly outlines their position. Further, because of the ongoing legal proceedings, they have been asked by their attorney not to comment on the matter.
Inspire has lodged two complaints against PSD. The first complaint aims to relieve Inspire of the financial burden associated with the PSD construction fees incurred by Garry Shuster, while the second seeks to substantially reduce their PSD Operating and Maintenance fees (O&M) to a mere one-third of the sewer bill.
Inspire Disputes Construction Fees & Sewer System Compatibility
Inspire Communities is disputing the construction fees of about $650K for Phase 1, 1A, and 2 of the RV Park—A debt obligated by the Shuster companies prior to their purchase. Inspire believes these construction costs were solely meant to repay the entire WIFA loan of $3 million. Furthermore, they argue that PSD will not service Phase 1 and 2 of the RV Park.
Bill Spain, the Board President of PSD, explains that the construction costs were allocated among the property owners on the west side, with their agreement based on the benefits derived from the provided infrastructure. Furthermore, the Pinewood News obtained the construction cost invoice approved by the PSD board, which amounted to $1,972,586 for the lots and associated construction fees. It’s important to note that this amount does not represent the entire $3 million of the WIFA loans that Inspire suggests. According to Bill Spain, the remaining funds from the WIFA loans were used to make repairs and bring the North Lodge and Northernaire properties online with PSD.
Inspire is correct that Pinewood Sanitary District cannot currently provide services for Phases 1, 1A, and 2 of the RV Park. These phases still rely on septic systems, fundamentally different from PSD sewer systems, and cannot be interconnected.
Septic systems pose a higher risk due to elevated levels of harmful pathogens, contaminants, and potentially toxic chemicals in R.V. septic systems. To ensure proper wastewater treatment, prevent water source contamination, and protect public health and the environment, stopping the discharge of septic waste into PSD’s sewer system is essential.
Prohibiting septic waste is especially critical for PSD because they discharge into areas that run off into Oak Creek. Our sewer company must follow strict guidelines from the E.P.A. and the ADEQ to protect our water source and environment. As a side note, this is one of the reasons PSD will report to the authorities anyone in Munds Park emptying R.V. waste into home sewer lines.
Despite Inspire’s current inability to connect due to their continued use of septic systems, it seems that the Shuster companies had the foresight to prepare for the future. It is conceivable that when Garry Shuster facilitated the annexation of the entire RV Park (Phase 1, 1A, 2, 3, 4, and 5) into PSD in 2013, he had precisely this in mind—That one day, the septic systems will fail, and ADEQ will require hook up to the Sanitary District. Unfortunately, the bill is due for Inspire, and they simply do not want to pay.
The lingering question remains: Did the Shuster companies inform Inspire about this financial obligation before selling the RV Park? If they did not disclose it, one might wonder why Inspire chose to take legal action against PSD instead of pursuing litigation directly against the Shuster entities. Alternatively, if the Shusters did disclose this pending debt, wouldn’t it have been more appropriate to negotiate this contested debt during the sale of the RV Park rather than suing our hometown sewer district? These circumstances raise legitimate questions that leave us pondering the motivations behind Inspire’s course of action.
Inspire Says Paying the Full Bill for Sewer Service is Unfair!
During the August 11, 2022 PSD Board Meeting, members voted unanimously, and with strong community support, stating that “a toilet on the west side is the same as a toilet on the east side,” and all residential dwellings will be charged the same Operation and Maintenance Fees (O&M Fees) of $50.57 per household.
Inspire Communities is contesting the PSD fees and argues that they are unjust and do not comply with proportionality requirements. Fees, they say, must reflect proportional shares of the wastewater system’s operational costs. Inspire points out that PSD’s own rules emphasize the need for proportional distribution of these costs among users.
They further argue that the 08/11/2020 PSD R&R estimates approximately 53 gallons of effluent per day for park models. Based on this projection, PSD assigns an “equivalent residential unit,” establishing a proportional relationship between the effluent generated by a single-family residence and that produced by park models. They continue, stating that park models are smaller and accommodate a maximum of two people, generating significantly less effluent than a typical home.
The R&R dated 08/11/2020, under Schedule II Commercial Schedule of Fees, does estimate 53 gallons of effluent per day for park models, but it also notes the monthly O&M fee is $50.57 for park models, reflecting the board’s vote, that all toilets are the same.
While single-family homes in Munds Park are billed a flat rate of $50.57 per month, Inspire maintains that their sites should be assessed proportionally. According to Inspire, the maximum assessment for park models would be $16.86 per month (1/3 of the O&M fees).
According to Inspire’s notion of ‘proportionality requirements,’ should my neighbors across the street, who have a household of two people (the same number of people in park models) and are here only sporadically, pay significantly less for their service? What about my other neighbor, who lives here year-round but is just one person? Should he also pay his sewer bill proportionally to his usage? And what about the short-term rental property behind me, where they maximize occupancy by renting to as many people as they can stuff into their home? Shouldn’t they be responsible for paying more? These examples raise valid questions regarding the fairness and practicality of Inspire’s proposed approach and make one wonder why they choose not to fully support the infrastructure that sustains the very community in which they reside.
The Pinewood Sanitary District’s Legal Team Seeks Case Dismissal
In an effort to bring about a fair resolution, the Pinewood Sanitary District has taken steps to request the court’s dismissal of Inspire’s lawsuit. PSD argues that the involvement of key individuals who are currently not part of the case is crucial.
If the court denies the motion to dismiss, PSD is seeking an alternative solution by insisting that these “indispensable non-parties” be included as mandatory participants in the lawsuit.
PSD has specifically identified the following parties as vital to the proceedings:
M.B.C. Properties No. 3, LLC
Pinewood Partners, LLC
All other property owners within the boundaries of PSD, particularly those residing on the west side of Interstate 17 (“West side Property Owners”).
In the intricate web of our community’s affairs, a disheartening truth emerges. The major players, who profit handsomely from our community, seem strangely averse to fulfilling their financial obligations or bearing their fair share. When prominent local businesses such as Inspire Communities and the Shuster companies turn their backs on their fiscal responsibilities, it inevitably falls upon the ordinary folks to shoulder the burden, as they so often do.
Inspire Communities compliant and PSD's motion to dismiss is below for those who would like to read further into the issues.
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